Russia Bans Western Food Over Ukraine Sanctions

VLADIMIR ISACHENKOV

Thursday, August 07, 2014

MOSCOW --

Russia on Thursday banned most food imports from the West in retaliation for sanctions over Ukraine - a sweeping move that will cost Western farmers billions of dollars but could also lead to empty shelves in Russian cities.

The decision shows that President Vladimir Putin has no intention of bowing to Western pressure over Ukraine and will instead try to strike back at the West. It also demonstrated that the Kremlin is prepared to inflict damage on Russia while pursuing its course in Ukraine.

The U.S. and the EU have accused Russia, which annexed Ukraine's Crimean Peninsula in March, of fomenting tensions in eastern Ukraine by supplying arms and expertise to a pro-Moscow insurgency, and have imposed asset freezes and loan bans on a score of individuals and companies. Moscow has rejected the accusations and in turn accused the West of blocking attempts at a political settlement by giving a green light to Kiev to crush the mutiny through indiscriminate use of force, swelling civilian casualties.

A somber-looking Prime Minister Dmitry Medvedev said at a televised Cabinet meeting that Russia's retaliatory ban covers all imports of meat, fish, milk and milk products and fruit and vegetables from the United States, the European Union, Australia, Canada and Norway. It will last for one year.

"Until the last moment, we hoped that our foreign colleagues would understand that sanctions lead to a deadlock and no one needs them," he said. "But they didn't and the situation now requires us to take retaliatory measures."

Russia depends heavily on imported foodstuffs - most of it from the West - particularly in the largest and most prosperous cities such as Moscow. In 2013 the EU's agricultural exports to Russia totaled 11.8 billion euros ($15.8 billion), while the U.S. Department of Agriculture says food and agricultural imports from the U.S. amounted to $1.3 billion.

Medvedev argued that the ban would give Russian farmers, who have struggled to compete with Western products, a good chance to increase their market share.

But experts said that local producers will find it hard to fill the gap left by the ban, as the nation's agricultural sector has continued to suffer from poor efficiency and shortage of funds.

While the government claimed it will move quickly to replace Western imports by importing more food from Latin America, Turkey and ex-Soviet nations to avoid empty shelves and price hikes, analysts predicted that it will further speed up inflation.

The damage to consumers inflicted by the ban will be felt particularly hard in big cities like Moscow, where imported food fills an estimated 60-70 percent of the market.

Medvedev said Russia could go further and ban Western carriers from flying over Russia on flights to and from Asia - a move that would significantly swell costs and increase flight time. He said that the government is considering the move as retaliation to the EU's sanctions against Russian low-cost airline Dobrolet, but wouldn't specify when and under what conditions the move could be taken.

Medvedev made it clear that Russia hopes that the sanctions will make the West revise its policy and stop trying to pressure Russia with sanctions.

"We didn't want such developments, and I sincerely hope that our partners will put a pragmatic economic approach above bad policy considerations," he said, adding that the ban could be lifted earlier if the West shows a "constructive approach."

If the West doesn't change course, Russia may follow up by introducing restrictions regarding imports of planes, navy vessels, cars and other industrial products, Medvedev warned, but added that the government will move carefully.

"The government understands how important such cooperation is, and naturally, we have a realistic assessment of our own capacities," he said.